The 61st Session of Philosophical Foundations of Law and Finance (Friday, 5 Nov, 6-8pm, room 5.17, 309 Regent Street) will be devoted to:
Overcoming Information Asymmetry in Law and Finance
with simple illustrations from entrepreneurial business plans to more complex examples from securities prospectuses.
A very sophisticated use of information asymmetry theory can be found in http://www.federalreserve.gov/pubs/ifdp/2010/1010/ifdp1010.pdf (Nov. 2010) where Beltram & Thomas argue that information asymmetry alone is sufficient to explain the credit crisis and to provide a criterion for judging the potential success or failure of proposed regulatory solutions to the credit crisis. Joe recommends all Corporate Finance Law and International Banking Law students read the article since it provides a particularly good review of the recent scholarly literature and shows how information asymmetry may be used in arguendo to reach surprisingly general results. The article was spotted by Edmond Curtin. Many thanks, Edmond.
As part of our philosophical investigation we shall ask, "What are the assumptions underlying information asymmetry?" One possible answer comes from the concept of "mutuality of information" based on the symmetric correlation of probabilities between information-communication systems. [See, Seth Lloyd (1996) “Causal Asymmetry from Statistics” in Physical Origins of Time Asymmetry edited by J.J. Halliwell, J. Perez-Mercader, and W.H. Zurek, Cambridge, Cambridge University Press.] We will try to elucidate mutuality of information in relation to social phenomena and legal systems. For example, the goal of Plato’s Laws was to attain “social amity" which could not be had unless there was a mutuality of information at every level of society. [See, Plato's Laws, Book I.]
In class readings of Aristotle's Art of Rhetoric will continue on the forensic, epidetic and deliberate forms of enthymemes (available a http://classics.mit.edu/Aristotle/rhetoric.html).
Afterwards if we feel for pan-Asian food and good company please join us for a nice dinner at Wagamama at 101a Wigmore Street. Please RSPV so that we can arrange for reservations.
Rezi & Joe